TTM Technologies, Inc.
Q4 2008 Earnings Call Transcript

Published: 11 Feb 2009

[Operator:]

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the TTM Technologies fourth quarter financial results conference call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions) As a reminder, this conference is being recorded today on Tuesday, February 10, 2009. I would now like to turn the conference over to Mr. Kent Alder, Chief Executive Officer. Please go ahead, sir.

[Kenton Alder:]

Okay. Thank you. And good afternoon, and thanks for joining us for our 2008 fourth quarter conference call. Joining me on today’s call is TTM’s CFO, Steve Richards. Before we get into any details, let me mention that during the course of this call, we will make forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, fluctuations in quarterly and annual operating results, the volatility and cyclicality in various industries that the company serves, and the impact of the current economic crisis, and other risks described in TTM's most recent SEC filings. The company assumes no obligation to update the information provided in this conference call. Also you will note, in our press release issued today that we provide GAAP and non-GAAP financial information, specifically with reference to EBITDA, the reconciliation between GAAP and non-GAAP information is provided in the press release. Now as you know, because of the global market conditions, we made the difficult decision to close our Redmond, Washington facility. Shifting production from the underutilized Redmond facility to TTM's other plants will increase utilization and productivity in those facilities. Equally as important we have improved TTM's overall cost structure and strengthened our competitive position. We also reduced headcount at four other facilities by approximately 140 employees. While we are committed to continually evaluating our cost structure, we currently have no additional restructuring plans. Now let me provide a quick overview of the fourth quarter. Despite the challenging business environment, I’m pleased to report that we again delivered solid financial performance in the quarter. We generated significant cash, exceeded our revenue guidance and excluding impairment charges came in at the high-end of guidance for both gross margins and earnings per share. The Aerospace/Defense end market continue to be a major source of strength. On a segment basis, Printed Circuit Board Manufacturing recorded fourth quarter net sales of $144.2 million compared with $148 million in the third quarter. Fourth quarter operating segment income and this is excluding impairment charges of $120.6 million, was $13.1 million compared with income of $14.3 million in the third quarter. Including the impairment charges, our operating loss in this segment was $107.5 million. Steve will discuss the details in his remarks. On a sequential basis, average price per panel increased roughly 3%, due primarily to a higher tech and product mix. Panel production declined by approximately 6% sequentially due to softer orders from our commercial customers. With the Backplane Assembly segment, fourth quarter net sales were $31.1 million, compared with $29.3 million in the third quarter. Fourth quarter operating segment income and again this is excluding an impairment charge of $2.7 million, was $2.3 million compared to $2.1 million in the third quarter. Including the impairment charge, our operating loss in the segment was $0.4 million. For the full year 2008, net sales were $681 million, an increase of $11.5 million, or 1.7% over 2007 net sales of $669.5 million. Now let’s look at our four end markets. The main driver this quarter continued to be aerospace and defense. Together with network and communications, these two end markets again accounted for more than three quarters of our net sales. Aerospace and defense increased from 39% of net sale in the third quarter, to 40% in the fourth quarter based on continued strength with the majority of our customers in this end market. In our Printed Circuit Board Manufacturing segment, the aerospace and defense end market represents approximately half of our sales. Net working communications at 37% of net sales was down from 39% in the third quarter due primarily to softer sales from the key networking customer in the printed circuit board segment. In our printed circuit board manufacturing segment, network and communications represents 27% of sales. The computing storage and peripheral end market increased to 12% of net sales and medical/ industrial instrumentation remains steady with the prior quarter at 11% of net sales. In the computing end market, we saw renewed demand for high-end server from two well-established customers and we also had improved sales in storage equipment. And our top five customers comprised 30% of fourth net sales and represented a strategic mix of commercial and aerospace defense customers. No OEM customer represented more than 10% of sales for the quarter. In alphabetic order, our top five OEM customers in the fourth quarter were Cisco, ITT, Juniper, Northrop Grumman and Raytheon. Operationally, our average layer count for the printed circuit boards in the fourth quarter was 13.7, compared to 13.8 in the third quarter. We continue to maintain a very high average layer count while improving our technological capabilities and increasing our high-tech product mix with more HDI sequential lamination and Rigid Flex work. Quick-turn as a percentage of total revenue was 12%. This is a slight increase from 11% in the third quarter. Lead times decreased slightly from the third quarter. Lead times for our commercial customers range from three to five weeks, while lead times in our aerospace and defense are at five to six weeks. Lead times for some of our high-tech specialized aerospace and defense products are at 14 to 20 weeks. At the end of December, our printed circuit board book-to-bill ratio was 0.92, which compares to the IPC book-to-bill ratio of 0.89 for the same period. While TTM’s book-to-bill has moved down, the continued strong contribution from aerospace and defense has helped us remain above the industry average. On another note, we continue to evaluate acquisition opportunities that will further our business strategy and benefit our shareholders. As we have in the past, we will act prudently and judiciously access the merits and timing of any investment we make. We believe our global strategy is the correct strategy and we intend to make the right investment decision at the right time. This is a challenging market environment and we will respond accordingly and manage our business as we always have with the tight focus on financial discipline, customer satisfaction and a long-term view of future growth opportunities. We remained confident in our business model. Our recent capacity consolidation actions has solidified our company and improved our ability to compete and importantly we continue to generate cash. Now Steve will review our financial performance for the fourth quarter and the full year and discuss our outlook for the quarter.

[Steven Richards:]

Thanks Kent. And good afternoon everyone. As Kent noted, we are pleased to report solid operating results for the fourth quarter of 2008, which were inline with our guidance when you exclude the goodwill and fixed asset impairment charges. Fourth quarter net sales of $164.9 million decreased $4.1 million, or 2.4% from third quarter net sales of $169 million. The aerospace/defense and network and communications end markets continued to make strong contributions for the company. Gross margin for the quarter of 18.6% declined from third quarter gross margin of 19%. Selling and marketing expense for the fourth quarter were $7.4 million, or 4.5% of net sales, which is down slightly from third quarter selling and marketing expense of $7.6 million, or 4.5% of net sales. Fourth quarter G&A expense, including amortization intangibles, was $8.8 million or 5.3% of net sales. Third quarter G&A expense, including amortization intangibles, was $9.1 million or 5.4% of net sales. Fourth quarter G&A expense fell primarily due to lower incentive compensation expense. In the fourth quarter, we incurred stock-based comp expense of $1.2 million consistent with the third quarter expense. The approximate percentage breakdowns are as follows

[Operator:]

Thank you, sir. (Operator instructions). Our first question comes from the line of Shawn Harrison with Longbow Research. Please go ahead.

[Shawn Harrison:]

Good evening, Steve and Kent. Just I wanted to get to the incremental margins. It looks like you are being implied here with the guidance for the March quarter. They look a little bit higher than normal, somewhere in the kind of a 50% range, and I was just wondering maybe if you could detail some of the factors behind that. And then maybe some more details just on the timing of the roll on from the savings of the closure of Redmond and also kind of the other layoffs that you've implemented?

[Steven Richards:]

Yeah, sure Shawn. As you know in general our incremental margin on the PCB manufacturing side is kind of at that 50% level because obviously our fixed cost business, labor and capital equipment [jointly] increased. We have to do incremental work and that’s very true of the current scenario with the Redmond transfer. The work that we will be sending to other plants will increase utilization of those plants. We effectively won’t need to add any additional staff at those locations or equipment at least in the near-term to accommodate that work. In terms of the run rate, we are looking at a run rate for 2009 for that Redmond plant of about $36 million a year, or about $9 million per quarter. Obviously, we don’t expect that and just simply map over to the new plants, that clearly but we do have a fair amount of cross qualification of the customers in Redmond with our other plants. So, we expect to have about $6 million of revenue in the second quarter that comes from Redmond plant and is being built at other locations and about $7.5 million in the third and fourth quarter of this year.

[Shawn Harrison:]

Okay. And then just maybe on the restructuring savings. When do you expect to see kind of a full run rate at that $20 million to $25 million? Steve.

[Steve Richards:]

That will be Q2. We'll probably see about $2 million of cost savings in the first quarter and that's not mostly from Redmond, it’s more from the other layoffs we did in mid January. About a 140 people, so you see about probably a $1.4 million in savings in the first quarter for labor spends about $600,000 or lower depreciation expense due to the asset impairment we recorded. And then in the beginning of the second quarter based on our current plan to shutdown Redmond in the middle of March, we should start seeing about $5 million of savings per quarter beginning in the second quarter.

[Shawn Harrison:]

Okay. And then just on the pricing environment and then also raw materials, it sounds like the pricing environment was pretty benign here in the December quarter, maybe kind of what you are seeing out there now and then what are you seeing in terms of just input cost right now?

[Kenton Alder:]

Yeah Shawn, our pricing was up 3.3% during the quarter that mainly though is a result of higher technology mix within the products that we produce. Overall it seems like pricing in the marketplace is holding pretty steady. There are has been some spotty price competition. Maybe this quarter that we didn’t see last quarter, but it’s certainly not a trend, it's just more on an isolated basis. So, pricing doesn't seem to be at least at this point in time an issue. As far as material cost, we have been able to successfully negotiate lower material costs, kind of on an item-by-item basis. So, material costs are going down, and we think that we will have some pretty nice savings going forward, as far as material costs go. I'm not sure I want to quantify that but we are reducing our cost of materials.

[Shawn Harrison:]

Okay, thanks a lot.

[Operator:]

Thank you, sir. Our next question comes from the line of Steven Fox with Bank of America - Merrill Lynch. Please go ahead.

[Steven Fox:]

Hi, I am curious a little bit more about the pricing question. If you look at over the next couple of quarters, are you encouraged by the amount of capacities that’s coming out of the industry given how demand is weakening? I guess ex-defense and aerospace. Is there a chance that we could windup with significant excess that could cause pricing pressures maybe two quarters from now, and how would you describe the risk to potentially a worse case scenario I guess?

[Steven Richards:]

Yes, Steve, I wish I had a crystal ball on that. But we have taken some capacity outage within our TTM facilities. The marketplace is still in a situation where there is excess capacity. So how much excess capacity is and how that relates to future demand is kind of a big question mark. As I look at our pricing and coding and activity right now, it’s not an issue and if you look at the capacity ratio, the excess capacity we have right now, you would think it might even be more of an issue than it is. So it’s clear that we are not anticipating any increase in pricing, but I don’t think it’s going to get too much worse from where it’s out at right now. There are some contracts we have in place that go quarter-over-quarter and some other things. We look at the pricing we get on some of the new technology. Some times you are selling more than just a product. You are selling the engineering support in time and demand and our company are certainly well positioned to sell more than just the products. So it’s not as if you are just subject solely to capacity. You have to have the capabilities that your customers want, and be in the position to deliver on more than just products. So I think with TTM we have positioned ourselves well to operate in profitable niches, service customers and avoid some of the price competition that’s created solely because of too much excess capacity.

[Steven Fox:]

Okay that’s helpful. And then just a little bit more detail on where you stand with potential acquisitions. From the standpoint given all that’s going on from valuations and also the business environment, would you consider it more or less likely that you consummate an acquisition over the next say 6 to 9 months, then say what you would have thought a few months ago?

[Steven Richards:]

Yeah, with the downturn that kind of changes the environment and if you are looking at a company that is struggling it puts that company in a position to be more for sale than otherwise. Our objective is to buy well-run companies that are producing income and then enhance that company. So from the standpoint that we’re looking at well-run companies this market situation has not been helpful. It’s probably delayed our acquisition opportunities. Now we've been active in the acquisition front or at least looking for companies for a number of years now. So, we are pretty abreast of who we think would fit but we don’t have anything on the imminent horizon here and the market condition has not been helpful.

[Steven Fox:]

Okay, thank you.

[Operator:]

Thank you, sir. Our next question comes from the line of Matt Sheerin with Thomas Weisal. Please go ahead.

[Matthew Sheerin:]

Yes, thanks. Hi Kent and Steve. So, just regarding your guidance and I know that maybe one within the whole supply chain you are seeing softness in orders from customers. But could you be specific about where you are seeing the order cuts by segment?

[Steven Richards:]

Yeah Matt. Let me talk a little bit about it in a little broader terms. When we look into the first quarter we see our Backplane business decreasing by about I would say 16% [15% to 16%] and that’s mostly in the U.S. operation. On the commercial side of things, our commercial printed circuit board business, we anticipate to be down about 10% and a lot of that is within the Redmond facility. And aerospace/defense that’s going to be of a little bit in the first quarter 2% or 3% mainly due to some softness in the commercial aerospace. The defense, weapons, communication, radar systems all of those programs are still pretty solid for us, but there is some softness in the commercial aerospace. And then more directly on network and communications going forward, that’s probably the end market that will be most negatively impacted by the macro market conditions. These companies just don’t seem to be spending on IT. So, in the first quarter the network and communications will take the biggest hit if you will. They will be down dollar basis and a percent of sales. Communication or computing going forward, in the fourth quarter and the computing segment, we had some pretty nice orders come to us from high-end servers and storage products. And there are some seasonality, it seems like in that end market on the end of the year. But we did some rush orders at the end of the quarter. The Q4 and those probably won’t return in Q1. So, while it won’t be as healthy in Q1 as it was in Q4, that computing segment will still be fairly steady. Regarding the medical/industrial/instrumentation segment, that’s going to be pretty flat going into the first quarter. The medical portion is stable. Industrial portion of that end market is pretty solid. There is some projects we’re involved on that are not impacted by the global recession with the power plants, windmill controls and so forth that give that end markets some stability. The instrumentation portion of that end market is probably the one that’s most negatively impacted as we look at demand for semiconductor test equipment and another test equipment within the marketplace.

[Matthew Sheerin:]

Okay, thanks that’s helpful. And do you get a sense at all that things may start to improve later in the quarter or into June as customers work off their inventory and kind of deal with demand situation or is it just too hard to tell right now?

[Steven Richards:]

I don’t think we have that visibility Matt. I wish we did but it doesn’t feel like it’s an inventory situation. It’s more related to this global market situation that we are in.

[Matthew Sheerin:]

Okay. And thank you, could you talk about the raw materials costs and particularly the copper laminate prices. Are you starting to see it go down now with raw copper prices going down? I know your customers are asking you about that and asking for price rates because of that?

[Steven Richards:]

We’re not necessarily getting the pressure from customers that are out of the ordinary customers always would like to have lower prices and of course we always want lower prices from our suppliers. But yes the answer to the commodity copper prices, we have been able to achieve some lower material costs on those products that have copper involved with them. But we're also going out to suppliers on other items that aren’t involved with the materials and talking about how we can reduce costs and we’re being quite successful in negotiating lower costs on a number of items. And so our material costs will be lower as we go throughout 2009.

[Matthew Sheerin:]

Okay and just lastly with all these cost cutting efforts playing out in the next quarter too. And if we were to assume that revenue would be down let's say in low-to-mid-single-digits sequentially in June, with the costs out would the profitability still be sort of where it is at current revenue levels or would this still be negative leverage there?

[Kenton Alder:]

Explain that question just a little …

[Matthew Sheerin:]

Well I’m just trying to get a sense of how much the savings that you are taking into cost taking out? How much will that help you in coming quarters even if demand continues to soften? So in other words if the demand is down a little bit, if you are taking costs out, can you still keep profitability at the rates that you are guiding to this quarter?

[Kenton Alder:]

I mean with the leverage in our top line if that goes down, it's tough to get enough costs saving on material side to compensate for that. I mean every time we negotiate lower material costs, it's helpful and goes right to the bottom line, but when you lose the top line just because of the high fixed cost business wherein.

[Matthew Sheerin:]

I guess my question can since regarding the fixed costs and the headcount reductions that sort of thing and is that going to get you to a place where you’re going to be more profitable or give you more leverage when volumes do come back?

[Steven Richards:]

Yeah, and I think a lot of it hinges on say, how much we’re down in Q2, assuming we are going to be down in Q2, it's to early to say but based on your premise. How much we’re down in Q2, and then also kind of which product line it is, certainly we have certain products line likes quick turn in high-tech that are more lucrative than others. But I do see that risk and benefit in Q2 from a full quarter run rate of the cost savings on labor and just under on depression as well and that should help us starting to plateau I think. But I do think given the fixed cost nature of our business, I wouldn’t necessarily expect us to start bouncing back in Q2, but maybe start plateauing more. Is that helpful?

[Matthew Sheerin:]

Okay, that’s helps thanks a lot.

[Operator:]

Thank you, sir. Our next question comes from the line of Amitabh Passi with UBS. Please go ahead.

[Amitabh Passi:]

Hi, thank you. Can you guys hear me?

[Steven Richards:]

Yeah.

[Kenton Alder:]

Yes.

[Amitabh Passi:]

My first question was just on the network and communication segment. I was hoping to provide a little more color in terms of what you saw there with your major customers in this particular quarter to fourth quarter?

[Kenton Alder:]

With the emerging customers?

[Amitabh Passi:]

No, in the network and communication segment just what the dynamics where with some of your major customer between U.S. customers and your international customers and then maybe between comp and networking?

[Kenton Alder:]

In the networking section again I mean because there was lower IT spending and this is both on the enterprise and the service provider side. We had lower demand in the networking segment. And it was from the couple of major customers. Now the network and communication is a significant portion of our Backplane assembly, to it's almost like 90% of what we do in Backplane assembly, but that was pretty healthy in the fourth quarter, and that was driven mainly by one customer in China. And so in the Backplane we didn’t have a decrease, so most of the decrease came from the printed circuit board segment with U.S. customers and they were some of the major customers.

[Amitabh Passi:]

Got it. And Kent just with respect to your customer in China, do you expect that to remain relatively strong going forward in the next couple of quarters?

[Kenton Alder:]

Yes, yep.

[Amitabh Passi:]

Okay, and then just one more question. If I look at your business excluding aerospace/defense, I think for the last five quarters, we've actually seen negative year-over-year trends. And I'm just wondering as you look at the company from the strategy perspective I mean how do you think we get growth outside of aerospace/defense. I know you've talked about international expansion. I was just wondering if you can talk to your strategy again because as I said it really seems like outside of aerospace/defense. I mean the rest of the company has been down for almost five quarter in a row?

[Kenton Alder:]

That’s a good observation and when you look at the North American opportunity again we are struggling with the fact that there is too much competition in North America. And so we have to grow by winning business and gaining market share in a shrinking marketplace. And I think relatively speaking we've done quite well, because we have the right strategy. We've got the right management team to execute the strategy but the marketplace has not given us much to work with. So, until we have some capacity come out of the marketplace, I mean the fact of the matter is it can be hard to grow organically, so the marketplace will let us do so in the United States.

[Amitabh Passi:]

Got it, thank you. I'll jump back in the queue.

[Operator:]

Thank you, sir. Our next question comes from the line of Jiwon Lee with Sidoti & Company, please go ahead.

[Jiwon Lee:]

Yeah thanks. First question is how should we be thinking about the aerospace/defense business beyond the first quarter with the kind of programs that you are involved in?

[Kenton Alder:]

Yeah that’s a good question and we look for through 2009, our aerospace/defense business to be up through 2009. So even though we’re going to have some softness in the first quarter, that’s mainly related to the commercial aerospace portion of that end market segment and maybe that continues on a little that softness beyond the first quarter. But overall when you look at the programs that we are involved with on the defense side and the guidance and the radar systems, communication systems and the programs that already in place plus some others that we anticipate winning aerospace/defense through 2009 will increase for us.

[Jiwon Lee:]

Okay and has there been more noticeable competitive landscape change out of Asia recently that you could discuss with us?

[Kenton Alder:]

The answer is no. When we look at how we've been competing for the last two or three years, it just feels like we've competed on a global basis now for several years and we win business as we compete in the United States and we win business as we compete on a global basis because of our engineering capabilities, because of our flexibility in our manufacturing, because of all the customer service that we provide beyond the product and then we're producing a high technology product and we are producing a high mix product. So when you add up our specific strengths of our company, we win business because of the strategy and we win business not only against U.S. competitors but also on a global basis with Asian competitors. And you would think that if we are going to have more competition from Asia, we would have it now because everyone needs to fill their facilities. But the Asian competition in the fourth quarter was no different than it was in the third quarter or the second quarter.

[Jiwon Lee:]

Okay and just to be clear on your EPS guidance that is the GAAP number I think? No?

[Steven Richards:]

Right yes, so that’s why I wanted to make sure that we draw attention to the one-time charges and the new convert interest. So when you take the $0.01 to $0.06 range on a GAAP basis you want to at least consider the $0.02 increase in interest expense as non-cash due to the new FASB interpretation of APB 14 and also we have $2.8 million, or about $0.04 per share of one-time restructuring charges for the Redmond plant closure and the layoffs of the other employees. So, when you add that $0.06 we will have say an effective range of say $0.07 to about $0.12. We are also going to have probably a couple of cent impact this quarter from a run down of working process inventory from Redmond. Obviously as we close Redmond we’ll finish up all the inventory they have and those costs will peer our income statement in the first quarter. And most of the other plans are taking on Redmond to work won’t really start ramping up until the second quarter. So you got a lot things happening in the first quarter that affects the results but those are the key things.

[Jiwon Lee:]

And a lot of companies with this type of convertible debt have been very active in buying back a portion of it. Is that something that you guys are interested or?

[Steven Richards:]

Yes like you know, it's a subject to much discussion internally, Jiwon. As you can imagine that the prospect of paying $0.50 roughly now since our convert is trading for $1 we got back in May is pretty tempting. But of course given the downturn and some of the lack of visibility we have in our business, we also are being very cautious about using our cash for any purposes besides just ensuring ongoing business, security and viability. So, it's something we would by any means rule out, but we are also want your firm to do that at this point either. So it's a topic we have visited and will certainly visit over the next quarter or two.

[Jiwon Lee:]

Okay fair enough, thank you very much.

[Steven Richards:]

Sure.

[Operator:]

Thanks ma’am. (Operator Instructions). Our next question comes from the line of Rich Kugele with Needham & Company, please go ahead.

[Richard Kugele:]

Thank you good afternoon. Could you give us a sense you said you were talking about having lower CapEx this year. Do you have a ballpark for what you think it might be? How low you think you can go?

[Kenton Alder:]

Yeah. Our CapEx budget is about $13 million for this year and we spent $16 million last year. So, that’s what we have in the budget and that’s mainly for some technology improvements, but mostly just replacement equipment. So, we are going to save some money as we relocate some of the equipment out of Redmond into our other facilities and so forth. So, I'm pretty optimistic that 13 might be a little bit on the high-end, but that’s what we have in our budget.

[Richard Kugele:]

And from a capacity utilization standpoint, where do you see, let's say for example that it’s a flat quarter, next quarter of the midpoint on your guidance. What would your capacity utilization be now without Redmond at that level?

[Kenton Alder:]

Yeah, by closing down Redmond, we are going to increase the capacity utilization in our other facilities are accepting that work by about 8%. So, company as a whole without the Redmond closure would have a capacity utilization rate of 6% lower than with the Redmond closure. So, not sure and our capacity utilization rate in the last quarter was 72% to 75% that’s down slightly from say the third quarter. So, if we did not close Redmond we would be about 8% lower in the fourth quarter - 6% to 8% lower.

[Richard Kugele:]

Okay, and then Steve, from your gross margin standpoint. Half of this 14% to 16% again if we were to assume in the midpoint, would it be incorrect to increase the margin at all for the benefit of the restructuring?

[Steven Richards:]

It’s the premise here as opposed to Matt’s questions earlier, the premise here is that our revenue holds steady say from Q1 to Q2 and assuming about the same mix of work that's going to make a big differences as well. I would assume that on the same level of revenue in Q2, we’ve a bit of an improvement in gross margin because of the cost savings for the asset impairments and for the labor savings because of the Redmond closure.

[Richard Kugele:]

Okay, and has the restructuring changed with your long-term dealing is and what the business can generate from a margin prospective?

[Kenton Alder:]

No, I think long-term, well I mean closing Redmond helps improve utilization elsewhere. But still I think we believe that we could operate where we have in the past and to say 20%, 21%, 22%, 23%, 24% range, but conditions have to improve significantly to get there again.

[Richard Kugele:]

Okay. All right thank you very much.

[Operator:]

Thank you, sir. And at this time, there are no further questions in the queue. I would like to turn the conference back over to Mr. Alder for any closing remarks. Please go ahead sir.

[Kenton Alder:]

Okay. Thank you very much. We’ve got some interesting situations with the market that we have to deal with, but let you know that we will deal with those appropriately and continue to strengthen and build the company. Thank you very much for joining us and we will see you next quarter. Thank you.

[Steven Richards:]

Thank you very much.

[Operator:]

Thank you very much. Ladies and gentlemen, this does conclude the TTM Technologies fourth quarter financial results conference call. Thank you for your presence and thank you for your participation. You may now disconnect. Have a pleasant day.